Professional Documents
Culture Documents
INTRODUCTION
INTRODUCTION
A budget is a quantitative expression of a plan of action relating to the forthcoming
budget period. It represents a written operational plan of management for the budget
period. A plan expressed in money. It is prepared and approved prior to the budget
period and may show income, expenditure, and the capital to be employed, may be drawn
up showing incremental effects on former budgeted or actual figures, or be compiled by
zero based budgeting. Budget and Budgetary control. The terms budget and budgetary
control are often used interchangeable to refer to a system of managerial control.
Budgetary control implies the use of a comprehensive system of budgeting to aid
management in carrying out its functions like planning, co-ordination and control.
BUDGET:
According to Institute of Chartered Management Accountants (ICMA) England A plan
qualified in monetary term prepared and approved prior to a defined period of time
usually showing planned income to be generated and or to be incurred during that period
and the capital to be employed to attain a given objective.
BUDGETORY CONTROL:
The Chartered Institute of Management Accountants (CIMA) London defines
budgetary control as establishment budget relating to the responsibility of executives to
the requirement policy and the continuous comparison of actual with budgeted results
either to secure individuals action the objective of policy or to provide a basic for its
revision.
A budget is the monetary and quantitative expressions of business
plans and policies to be pursued in the future period of time the term budgeting is used
for preparing budgets and other procedures for planning co-ordination and control of
business enterprise. Budgetary control is the process of determining various budgeted
figures for the enterprises for the future period and then comparing the budgeted figures
with the actual performance for calculating variations, if any first of all budgets are
prepared and then actual results are recorded.
Personal observation.
Secondary data:
Printed Materials.
News papers.
LIMITATIONS
1. The study is purely based on the information provided by the company and the
data is collected from the reports, annual reports, and magazines of the company.
2. To study is restricted to HERITAGE FOODS.S LTD.
3. To study is restricted to limited period.
4. Estimates are used as basis for budget plan and estimates are based mostly on
available facts and best managerial judgment
5. Budgetary control cannot reduce the managerial function to a formula. It is only a
managerial.
6. Tool which increase effectiveness of managerial control.
7. The use of budget may be to restricted use of resources. Budgets an often taken as
limits.
8. Efforts may therefore not be made to exceed the performance beyond the
budgeted targets.
9. Frequent changes may be called for in budgets due to first changing industrial
climate.
CHAPTER-II
REVIEW OF LITERATURE
REVIEW OF LITERATURE
INTRODUCTION TO BUDGET AND BUDGETARY CONROL
Financial Management is the process of managing the financial resources,
including accounting and financial reporting, budgeting, collecting accounts receivable,
risk management, and insurance for a business.
The financial management system for a small business includes both how you are
financing it as well as how you manage the money in the business.
In setting up a financial management system your first decision is whether you
will manage your financial records yourself or whether you will have someone else do it
for you. There are a number of alternative ways you can handle this. You can manage
everything yourself; hire an employee who manages it for you; keep your records inhouse, but have an accountant prepare specialized reporting such as tax returns; or have
an external bookkeeping service that manages financial transactions and an accountant
that handles formal reporting functions. Some accounting firms also handle bookkeeping
functions. Software packages are also available for handling bookkeeping and
accounting.
Bookkeeping refers to the daily operation of an accounting system, recording
routine transactions within the appropriate accounts. An accounting system defines the
process of identifying, measuring, recording and communicating financial information
about the business. So, in a sense, the bookkeeping function is a subset of the accounting
system. A bookkeeper compiles the information that goes into the system. An accountant
takes the data and analyzes it in ways that give you useful information about your
business. They can advise you on the systems needed for your particular business and
prepare accurate reports certified by their credentials. While software packages are
readily available to meet almost any accounting need, having an accountant at least
review your records can lend credibility to your business, especially when dealing with
lending institutions and government agencies.
It is possible you may even be at the a point where you want to sell the business
or simply close it and liquidate assets. There are financial issues involved for these
circumstances too. So, be certain that you know what steps you need to take in order to
protect yourself financially in the the long run.
Clearly, financial management encompasses a number of crucial areas of your
business. Take time to set them up right. It will make a significant difference in your
stress levels and in the bottom line for your business.
EFFECTIVE
FINANCIAL
MANAGEMENT
Financial Planning
Financial planning is often thought of as a way to manage debt, but a good
financial plan really is a way to make certain that you have financial security throughout
your life. Many small business owners consider their business as their investment in their
future, but that is a huge risk to take. As any economist will tell you, diversification is the
only sure way to create security in the long run. Your business is one stream of income.
Putting together a financial plan that allows for multiple streams of income is what
provides you security in the longer term.
The essential components of a good financial plan are investing, retirement
planning, insurance, borrowing and using credit, tax planning, having a will, and ensuring
the right people receive your assets. Financial planning is the process of meeting your life
goals through the proper management of your finances. Life goals can include buying a
home, saving for your child's education or planning for retirement.
The financial planning process involves gathering relevant financial information,
setting life goals, examining your current financial status and coming up with a plan for
how you can meet your goals given your current situation and future plans.
There are personal finance software packages, magazines and self-help books to help
you do your own financial planning. However, you may decide to seek help from a
professional financial planner if:
you need expertise you don't possess in certain areas of your finances. For
example, a planner can help you evaluate the level of risk in your investment
portfolio or adjust your retirement plan due to changing family circumstances.
you want to get a professional opinion about the financial plan you developed for
yourself.
you don't feel you have the time to spare to do your own financial planning.
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you have an immediate need or unexpected life event such as a birth, inheritance
or major illness.
you feel that a professional adviser could help you improve on how you are
currently managing your finances.
you know that you need to improve your current financial situation but don't
know where to start.
A financial planner is someone who uses the financial planning process to help you
figure out how to meet your life goals. The planner can take a "big picture" view of your
financial situation and make financial planning recommendations that are right for you.
The planner can look at all of your needs including budgeting and saving, taxes,
investments, insurance and retirement planning. Or, the planner may work with you on a
single financial issue but within the context of your overall situation. This big picture
approach to your financial goals may set the planner apart from other financial advisers,
who may have been trained to focus on a particular area of your financial life.
In addition to providing you with general financial planning services, many
financial planners are also registered as investment advisers or hold insurance or
securities licenses that allow them to buy or sell products. Other planners may have you
use more specialized financial advisers to help you implement their recommendations.
With the right education and experience, each of the following advisers could take you
through the financial planning process. Ethical financial planners will refer you to one of
these professionals for services that they cannot provide and disclose any referral fees
they may receive in the process. Similarly, these advisers should refer you to a planner if
they cannot meet your financial planning needs.
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Accountant
Accountants provide you with advice on tax matters and help you prepare and submit
your tax returns to the Internal Revenue Service. All accountants who practice as
Certified Public Accountants (CPAs) must be licensed by the state(s) in which they
practice.
Estate Planner
Estate planners provide you with advice on estate taxes or other estate planning issues
and put together a strategy to manage your assets at the time of your death. While
attorneys, accountants, financial planners, insurance agents or trust bankers may all
provide estate planning services, you should seek an attorney to prepare legal documents
such as wills, trusts and powers of attorney. Many estate planners hold the Accredited
Estate Planner (AEP) designation.
Financial Planner
Many financial planners have earned the Certified Financial Planners certification, or the
Chartered Financial Consultant (ChFC) or Personal Financial Specialist (CPA/PFS)
designations. Financial planners can take you through the financial planning process.
Insurance Agent
Insurance agents are licensed by the state(s) in which they practice to sell life, health,
property and casualty or other insurance products. Many insurance agents hold the
Chartered Life Underwriter (CLU) designation. Financial planners may identify and
advise you on your insurance needs, but can only sell you insurance products if they are
also licensed as insurance agents.
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Investment Adviser
Anybody who is paid to provide securities advice must register as an investment adviser
with the Securities and Exchange Commission or relevant state securities agencies,
depending on the amount of money he or she manages. Because financial planners often
advise people on securities-based investments, many are registered as investment
advisers. Investment advisers cannot sell securities products without a securities license.
For that, you must use a licensed securities representative such as a stockbroker.
Stockbroker
Also called registered representatives, stockbrokers are licensed by the state(s) in which
they practice to buy and sell securities products such as stocks, bonds and mutual funds.
They generally earn commissions on all of their transactions. Stockbrokers must be
registered with a company that is a member of the National Association of Securities
Dealers (NASD) and pass NASD-administered securities exams.
The government does not regulate financial planners as financial planners; instead, it
regulates planners by the services they provide. For example, a planner who also provides
securities transactions or advice is regulated as a stockbroker or investment adviser. As a
result, the term "financial planner" may be used inaccurately by some financial advisers.
To be sure that you are getting financial planning advice, ask if the adviser follows the six
steps.
The Financial Planning Process Consists of the Following Six Steps
1. Establishing and defining the client-planner relationship.
The financial planner should clearly explain or document the services to be
provided to you and define both his and your responsibilities. The planner should
explain fully how he will be paid and by whom. You and the planner should agree
on how long the professional relationship should last and on how decisions will
be made.
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Understand the effect your financial decisions have on other financial issues.
Start now - don't assume financial planning is for when you get older.
Start with what you've got - don't assume financial planning is only for the
wealthy.
Look at the big picture - financial planning is more than just retirement planning
or tax planning.
You are the focus of the financial planning process. As such, the results you get from
working with a financial planner are as much your responsibility as they are those of the
planner.
To achieve the best results from your financial planning engagement, you will need to be
prepared to avoid some of the common mistakes by considering the following advice:
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"comfortable" and "good" mean so that you will know when you've reached your
goals.
information on your financial situation. Ask questions about the recommendations offered
to you and play an active role in decision-making.
BUDGET:
Budget is essential in every walk of our life national, domestic and Business. A
budget is prepared to have effective utilization of funds and for the realization of
objective as efficiently as possible. Budgeting is a powerful tool to the management for
performing its functions i.e., formulation plans, coordination activities and controlling
operations etc., efficiently. For efficient and effective management planning and control
are tow highly essential functions. Budget and budgetary control provide a set of basic
techniques for planning and control.
A budget fixes a target in terms of rupees or quantities against which the actual
performance is measured. A budget is closely related to both the management function as
well as the accounting function of an organization.
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Definitions of Budget:
According to Institute of Charted Management Accountants, England
A plan
quantified in monetary term prepared and approved prior to a defined period of time
usually showing planned income to be generated and / or to be incurred during that
period and the capital to be employed to attain a given objective.
According to ICMA, England, a budget is, a financial and/or quantitative
statement, prepared and approved prior to a defined period of time, of the policy to be
pursed during the period for the purpose of attaining a given objective.
It is also defined as, a blue print of projected plan of a action of a business for a
definite period of time.
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BUDGETARY CONTROL:
No system of planning can be successful without having an effective and efficient
system of control. Budgeting is closely connected with control. The exercise of control in
the organization with the help of budgets is known as budgetary control. The process of
budgetary control includes.
1
Continues comparison of the actual performance with that of the budget and
placing the responsibility of executives for failure to achieve the desired result a
given in the budget.
4. Taking suitable remedial action to achieve the desired
planning and controlling all aspects of producing and / or selling commodities and
services
.According to the CIMA, London, Budgetary control is the establishment of
budgets relating to responsibilities of executives to the requirement of a policy, and the
continuous comparison of actual with budged results, either to secure by individual action
the objective of that policy or to provide a basis for revision.
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Action is guided by well thought out plan because a budget is prepared after a
careful sturdy and research.
The budget serves as a mechanism through which.
Managements objectives and policies are affected.
It is a bridge through which communication is establishment between the top
management and the operatives who are to implement the policies of the top
management.
The most profitable course of action is selected from the various available
alternatives.
Co-ordination:
The budgetary control co-ordinates the various activities of the firm and secures
co-operation of all concerned so that the common objective of the firm may be
Successfully achieved. It forces executives to think and think as a group. It cocoordinating the policies, plans and actions. An organization without a budgetary control
is like a ship sailing in a chartered sea. A budget gives direction to the business and
imparts meaning and significance to its achievement by making comparison of actual
performance and budgeted performance.
Motivation:
It employees have actively participated in budget preparation and if they are
convinced that their personal interests are closely associated with the success of
organizational plan, budgets provide motivation in the form of goals to be achieved. The
budgets will motivate the workers, depends purely on how the workers have been
mentally and physically involved with the process of budgeting.
Control:
Control consists of the action necessary to ensure the performance of the
organization conforms to the plans and objectives. Control of performance is possible
with predetermined standards which are laid down in a budget. Thus, budgetary control
makes control possible by continuous comparison of actual performance with that of the
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budget so as to report the variations from the budget to the management of corrective
action.
Thus, budgeting system integrates key
managements planning function with the control function performed at all levels in the
managerial hierarchy. But the efficiency of the budget as a planning and control device
depends upon the activity in which it is being used. A more accurate budget can be
developed for those activities where direct relationship exists between inputs and outputs.
The relationship between inputs and outputs becomes the basis for developing budgets
and exercising control.
Approved Plan:
A mater budget provides an approved summary of results to be expected from
proposed plan of operations. It concerns all functions of organization and serves as a
guide to executives and departmental heads responsible for various departmental
objectives.
Communication:
The employees of an organization should know organizational aims, objectives of
subunits( budgets centers) and the part that they have to play for their attainment.
Budgets effectively communicate this information to employees. Besides, budges keep
Different sections of the organization informed about the contribution of different
subunits in the attainment of overall organizational objective.
Budget procedures:
Having the budget organization and fixed the period, the actual work or budgetary
control can be taken upon the following pattern.
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giving details of the powers, duties, responsibilities and areas of operation of each
executive in the organization.
Budget Manual:
A Budget manual lays down the details of the organizational set up, the routine
procedures and programmers to be followed for developing budgets for various items and
the duties and responsibilities of the executives regarding the operation of the budgetary
control system. CIMA England defines a budget manual as a document schedule or
Booklet which sets out, inter alia, the routine of and the forms and records required for
budgetary control. Thus, it is a written document which guides the executives in
preparing various budgets. Budgets are to be drawn keeping in view the objectives of the
organization given in the budget manual. Responsibility and functions of each executive
in regard to budgeting are written down in the budget manual to avoid any duplication or
overlapping of responsibilities. Steps and the methods for developing various budgets and
the methods of reporting performance against the budget are written down in the budget
manual. In short it is a written document which gives everything relating to the
preparation and execution of various budgets. It should be clear and there should be no
ambiguity in it.
The following are some of the most important matters covered in a Budget manual:
a
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The entire process of budgeting programme including the time table for
periodical reporting. A schedule should be drawn for this.
Purpose, specimen form and number of copies to be used for each report and
statement. Budget centers involved should also be stated clearly.
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Budgetary controller:
Although the chief executive l finally responsible for the budgetary programme. It
is better if a large part of the supervisory responsibility is deluged to an official
designated as Budget Controller or Budget Director. Such a person should have
knowledge of the technical details of the business and report directly to the president or
the chief executive.
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The procedure in continuous budgeting will be that a year will be divided into four
quarters. Monthly budgets for the first quarter and three quarterly budgets for the next
year can be prepared. For the first quarter precise estimates can be drawn up monthly.
The budget estimates for the second quarter may be revised working out separately
monthly estimates on more precise basis for control purposes before the starting of the
second quarter.
Similarly procedure may be followed for third and fourth quarters. This method a
time which need not be in respect of or coincide with the financial year. It will enable to
evolve a precise plan of action and control of variance functions at least for the
immediate quarter and a broad tentative one the subsequent three quarters on a continues
basis.
budget etc. should be prepared in accordance with this case plant capacity is limited.
Therefore, production budget should be prepared first and other budgets should follow
the production budget.
Thus, the budget relating to limiting factor should be prepared first and the other
budgets should be prepared in the light of that factor. All budgets should be cocoordinated keeping in view the principal budget factor if the budgetary control is to
achieve the desired results.
Principal budget factor is not static. It may vary rapidly from time to time due to
internal and external factors. It is of temporary nature and in the long run can be
overcome by suitable management taking sales promotion steps as increasing sales staff
and advertising. Plant capacity can be improved by better planning, simplification of
product or extension of plant.
Functional Budget:
A functional budget is a budget which relates to any of the functions of an
undertaking e.g., sales, production, research and development, cash etc, the following
budgets are generally prepared.
Budget
prepared by
Sales Manager
Production Manager
3. Material Budget
Purchase Manager
Personnel Manager
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5. Manufacturing Overheads
Production Manager
Finance Manager
Production Manager
Chief Executive
R&D Manager
Finance Manager
Sales Budget:
Sales budget is the most important budget and of primary importance. It forms the
basis on which all the budgets are built up. This budget is a forecast of quantities and
values of sales to be achieved in a budget in a budget period. Every effort should be made
to ensure that its figures are as accurate as possible because this is usually the starting
budget (sales being limiting factor on which all the other budgets are built up). The sales
Manger should be made directly responsible for the preparation and execution of the
budget. The sales budget may be prepared according to products, sales territories, types
of customers; salesmen etc., in the preparation of the sales budget, the sales manager
should take into consideration the following factors:
1
Salesmens Estimation.
Plant Capacity.
Orders in Hand.
Seasonal Fluctuations.
Financial Aspect.
10 Competition.
11 Miscellaneous Considerations.
Production Budget:
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Materials Budget:
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Purchase Budget:
Purchase Budget is mainly dependent on production budget and material
requirement budget. This budget provides information about the materials to be acquired
from the market during the budget period.
Purchase budget should be prepared by the purchase manger by getting relevant
information about capital items, tools, general supplies and direct materials required
during the budget period from other related departments. Like other budgets, the purchase
budget has to be approved by the budget committee. After approval it becomes the
responsibility of the purchase officer to see that purchases are made as per the purchase
budget. Sometimes additional purchases which are not covered by the purchase budget
are made under the following circumstances.
If there is increase in production not anticipated while preparing the purchase
budget and purchase of larger quantities of materials becomes necessary.
If accumulation of stock becomes necessary to avoid shortage of materials.
If overstocking is desired to take advantage of lower prices and there is fear that
price will increase in near future.
The purchase manger should get additional sanctions from the higher authorities
for making the additional purchases not covered by the purchase budget.
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The Cost Accountant prepares this budget on the basis of figures available in the
manufacturing overhead ledger or the head of the workshop may be asked to give
estimates for the manufacturing expenses. A good method is to combine the estimates of
the Cost Accountant and the shop executive.
This budget is the forecast of the cost selling and distribution for budget
period and is clearly related to the sale budget. All expenses related to selling and
distribution of the various products as indicated in the sales budget are included in it.
These expenses are based on the volume of sales set in the sales budget and budget and
budgets are prepared for each item of selling and distribution overhead. Long term
expenses.
As advertisement are spread over more than one period. Selling and distribution
overheads are divided into fixed and variable category with reference to volume of sales.
Separate budgets are prepared for variable and fixed items of selling and distribution
overheads. Certain items of selling and distribution costs as cost of transport department
are included in the departmental production cost budget from control point of view rather
that including in selling and distribution costs budget.
plant and equipment budget, building budget etc. The capital expenditure budget is an
important budget proving for acquisition of assets, necessitated by the following factors:
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3
1
Receipts and payments method: In case of this method the cash receipts from
various sources and the cash payments to various agencies are estimated. In the
opening balance of cash, estimated cash receipts are added and from the total of
estimated cash payments are deducted to find out of the closing balance.
The adjusted profit and loss method: In case of this method the cash budget is
prepared n the basis of opening cash and bank balance of the various assets an
liabilities.
The balance sheet method: With the help of budget balances at end except cash
and bank balances, a budgeted balance sheet can be prepared and the balancing
figure would be the estimated closing cash\bank balance.
Thus under this method, closing balances, other than cash\bank will have to be found out
first to be put in the budget balance sheet. This can be done by adjusting the anticipated.
The
Fixed Budget:
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This budget is drawn for one level of activity and one set of conditions. It has
been defined as a budget which is designed to remain unchanged irrespective of the
volume of output or turnover attained. It is rigid budget and is drawn on the assumption
that there will be no change in the budgeted level of activity. A fixed budget will,
therefore, be useful only when the actual level of activity corresponds to the budgeted
level of activity. A master budget tailored to a single output level of (say) 20,000 units of
sales is a typical example of a fixed budget. But in practice, the level of activity and set
conditions will change as a result of internal limitations and external factors like changes
in demand and price, shortage of materials and power, acute competition etc. It is hardly
of any use as a mechanism of budgetary control because it does not make any distinction
between fixed, variable and semi-variable costs and provides for no adjustment in the
budget fixed as result of change in cost due to change in level of activity. It is also not
helpful at all in the fixation of price and submission of tenders.
Flexible Budget:
The Chartered Institute of Management Accountants, defines a flexible budget
also called sliding scale budget as a budget which, by recognizing the difference in
behavior between field an d variable costs in relation to fluctuations in output, turnover,
or other variable factors such a number of employees, is designed to change appropriately
with such fluctuations. This, a flexible budget gives different budgeted costs for different
levels of activity. A flexible budget making an intelligent classification of all expenses
between fixed, semi-variable and variable because the usefulness of such a budget
depend upon the accuracy with which the expenses can be classified. Such a budget is
prescribed in the following cases.
Where the level of activity during the year varies from period, either due
to the seasonal nature of the industry or to variation in demand.
Where the business is a new one and it is difficult to foresee the demand.
Where the undertaking is suffering from shortage of a factor of production
such as materials, labour, plant, capacity etc. The level of activity depends
upon the availability of such a factor of production.
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Basic Budget:
A Basic budget has been defined as a budget which is prepared for use unaltered over a
long period of time. This does not take into consideration current conditions and can be
attainable under standard conditions.
Current Budget:
A Current budget can be defined a budget which is related to the current
conditions and is prepared for use over a short period of time. This budget is more useful
than a basic budget, as a target of lays down will be corrected to current conditions.
Long-Term Budget:
A Long-term budget can be defined as a budget which is prepared for periods
longer than a year. These budgets help in business forecasting and forward planning.
Capital Expenditure Budget and Research and Development Budget are examples of
long-term budgets.
Performance Budget:
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Performance Budgeting has its origin in U.S.A. after second World War. It tries
to rectify some of the shortcoming in the traditional budget. In the traditional budget
amount are earmarked for the objects of expenditures such as salaries, travel, office
expenses, grant in aid etc. In such system of budgeting the money concept was given
more prominence i.e. estimating or projecting rupee value for the various accounting
heads or classification of revenue and cost.
popularly used in government department and many business enterprises. But is such
system of budgeting control of performance in terms of physical units or the related costs
cannot be achieved.
Performance oriented budgets are established in such a manner that each item of
expenditure related to a specific responsibility centre is closely linked with the
performance of that centre. The basic issue involved in the fixation of performance
budgets is that of developing work programmers and performance expectation by
assigned responsibility, necessary for the attainment of goals and objectives of the
enterprise, it involves establishment of well defined centers of responsibilities,
establishment for each responsibility centre-a programmed of target performance e in
physical units, forecasting the amount of expenditure required to meet the physic al plan
laid down and evaluation of performance.
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as a base, a budget is developed on the basis of likely activities for the future period. In
ZBB, by declining the budget from the past, the past mistakes are not repeated. Funds
required for any for the next budget period should be obtained by presenting a convincing
case. Funds will not be available as a matter of course.
machines and money because production is planned according to the availability of these
items.
Everyone working in the concern knows what exactly to do because budgetary
control laid emphasis on the staff organization. It ensures that individual responsibilities
are clearly defined and that the required authority commensurate with the responsibility is
delegated so that buck passing ay is prevented when the budgeted results are not
achieved. Budgetary control takes the help of different levels of management in the
preparations of the budget. Budget finally approved represents the judgment of the entire
organization and not merely that of an individual or a group of individuals. Thus, it
ensures team work.
Management by exception is possible because the comparison of actual and
budgeted results points out weak spots so that remedial action is taken against weak spots
which are not in conformity with the budgeted performance.
Budgetary control creates conditions for setting up a system of standard costing.
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DIS-ADVANTAGES OF A BUDGET:
While budgets may be essential part of activity they do have number of disadvantages,
particularly in perception terms.
Budgets can be seen pressure devices imposed by management, thus resulting in:
a
Inaccurate record-keeping.
b) Departmental blaming each other if targets are not attained. It is difficult to reconcile
personal\individual and corporate goals. Waste may arise as managers adopt the view,
we had better sped it or we will lose it. This is often coupled with empire building in
order to enhance the prestige of department. Responsibility versus controlling, i.e. some
costs are under the influence of more than one person, eg. Power costs.
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CHAPTER-III
INDUSTRY PROFILE & COMPANY
PROFILE
INDUSTRY PROFILE
Today, India is 'The Oyster' of the global dairy industry. It offers opportunities
galore to entrepreneurs worldwide, who wish to capitalize on one of the world's largest
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and fastest growing markets for milk and milk products. A bagful of 'pearls' awaits the
international dairy processor in India. The Indian dairy industry is rapidly growing, trying
to keep pace with the galloping progress around the world. As he expands his overseas
operations to India many profitable options await him. He may transfer technology, sign
joint ventures or use India as a sourcing center for regional exports. The liberalization of
the Indian economy beckons to MNC's and foreign investors alike.
Indias dairy sector is expected to triple its production in the next 10 years in view
of expanding potential for export to Europe and the West. Moreover with WTO
regulations expected to come into force in coming years all the developed countries
which are among big exporters today would have to withdraw the support and subsidy to
their domestic milk products sector. Also India today is the lowest cost producer of per
liter of milk in the world, at 27 cents, compared with the U.S' 63 cents, and Japans $2.8
dollars. Also to take advantage of this lowest cost of milk production and increasing
production in the country multinational companies are planning to expand their activities
here. Some of these milk producers have already obtained quality standard certificates
from the authorities. This will help them in marketing their products in foreign countries
in processed form.
The urban market for milk products is expected to grow at an accelerated pace of
around 33% per annum to around Rs.43, 500 corers by year 2007. This growth is going to
come from the greater emphasis on the processed foods sector and also by increase in the
conversion of milk into milk products. By 2007, the value of Indian dairy produce is
expected to be Rs 10, 00,000 million. Presently the market is valued at around Rs7,
00,000mn
Background
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India with 134mn cows and 125mn buffaloes has the largest population of cattle in
the world. Total cattle population in the country as on October'00 stood at 313mn. More
than fifty percent of the buffaloes and twenty percent of the cattle in the world are found
in India and most of these are milch cows and milch buffaloes.
Indian dairy sector contributes the large share in agricultural gross domestic
products. Presently there are around 70,000 village dairy cooperatives across the country.
The co-operative societies are federated into 170 district milk producers unions, which is
turn has 22-state cooperative dairy federation. Milk production gives employment to
more than 72mn dairy farmers. In terms of total production, India is the leading producer
of milk in the world followed by USA. The milk production in 1999-00 is estimated at
78mn MT as compared to 74.5mn MT in the previous year. This production is expected
to increase to 81mn MT by 2000-01. Of this total produce of 78mn cows' milk constitute
36mn MT while rest is from other cattle.
While world milk production declined by 2 per cent in the last three years,
according to FAO estimates, Indian production has increased by 4 per cent. The milk
production in India accounts for more than 13% of the total world output and 57% of
total Asia's production. The top five milk producing nations in the world are India, USA,
Russia, Germany and France.
Although milk production has grown at a fast pace during the last three decades
(courtesy: Operation Flood), milk yield per animal is very low. The main reasons for the
low yield are
45
OPERATION FLOOR
The transition of the Indian milk industry from a situation of net import to that
of surplus has been led by the efforts of National Dairy Development Board's Operation
Flood. Programmer under the aegis of the former Chairman of the board Dr. Kurien.
Launched in 1970, Operation Flood has led to the modernization of India's dairy
sector and created a strong network for procurement processing and distribution of milk
by the co-operative sector. Per capita availability of milk has increased from 132 gm per
day in 1950 to over 220 gm per day in 1998. The main thrust of Operation Flood was to
organize dairy cooperatives in the milk shed areas of the village, and to link them to the
four Metro cities, which are the main markets for milk. The efforts undertaken by NDDB
have not only led to enhanced production, improvement in methods of processing and
development of a strong marketing network, but have also led to the emergence of
dairying as an important source of employment and income generation in the rural areas.
It has also led to an improvement in yields, longer lactation periods, shorter calving
intervals, etc through the use of modern breeding techniques. Establishment of milk
collection centers, and chilling centers has enhanced life of raw milk and enabled
minimization of wastage due to spoilage of milk. Operation Flood has been one of the
world's largest dairy development programmers and looking at the success achieved in
India by adopting the co-operative route, a few other countries have also replicated the
model of India's White Revolution.
Fresh Milk
Over 50% of the milk produced in India is buffalo milk, and 45% is cow milk.
The buffalo milk contribution to total milk produce is expected to be 54% in 2000.
Buffalo milk has 3.6% protein, 7.4% fat, 5.5% milk sugar, 0.8% ash and 82.7% water
whereas cow milk has 3.5% protein, 3.7% fat, 4.9% milk sugar, 0.7% ash and 87% water.
While presently (for the year 2000) the price of Buffalo milk is ruling at $261-313 per
MT that of cow is ruling at $170-267 per MT. Fresh pasteurized milk is available in
packaged form. However, a large part of milk consumed in India is not pasteurized, and is
46
sold in loose form by vendors. Sterilized milk is scarcely available in India. Packaged
milk can be divided according to fat content as follows,
Whole (full cream) milk - 6% fat
Standardized (toned) milk - 4.5% fat
Doubled toned (low fat) milk - 3% fat
another category of milk, which has a small market is flavored milk.
Growing Volumes
The effective milk market is largely confined to urban areas, inhabited by over 25 per
cent of the country's population. An estimated 50 per cent of the total milk produced is
consumed here. By the end of the twentieth century, the urban population is expected to
increase by more than 100 million to touch 364 million in 2000 a growth of about 40 per
cent. The expected rise in urban population would be a boon to Indian dairying. Presently,
the organized sector both cooperative and private and the traditional sector cater to this
market.
The consumer access has become easier with the information revolution. The number of
households with TV has increased from 23 million in 1989 to 45 million in 1995. About
34 per cent of these households in urban India have access to satellite television channel.
Potential for further growth
Of the three A's of marketing - availability, acceptability and affordability, Indian
dairying is already endowed with the first two. People in India love to drink milk. Hence
no efforts are needed to make it acceptable. Its availability is not a limitation either,
because of the ample scope for increasing milk production, given the prevailing low
yields from dairy cattle. It leaves the third vital marketing factor affordability. How to
make milk affordable for the large majority with limited purchasing power? That is
essence of the challenge. One practical way is to pack milk in small quantities of 250 ml
or less in polythene sachets. Already, the glass bottle for retailing milk has given way to
single-use sachets which are more economical. Another viable alternative is to sell small
quantities of milk powder in mini-sachets, adequate for two cups of tea or coffee.
47
Par lour market: The increasing away-from-home consumption trend opens new
vistas for ready-to-serve dairy products which would ride piggyback on the fast
food revolution sweeping the urban India
. India, with her sizable dairy industry growing rapidly and on the path of
modernization, would have a place in the sun of prosperity for many decades to
come. The one index to the statement is the fact that the projected total milk
output over the next 15 years (1995-2012) would exceed 1457.6 million tones
which is twice the total production of the past 15 years!
48
milk surplus states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat,
Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The manufacturing of milk
products is concentrated in these milk surplus States. The top 6 states viz. Uttar Pradesh,
Punjab, Madhya Pradesh, Rajasthan, Tamil Nadu and Gujarat together account for 58%
of national production.
Milk production grew by a mere 1% pa between 1947 and 1970. Since the early 70's,
under Operation Flood, production growth increased significantly averaging over 5% pa.
About 75% of milk is consumed at the household level which is not a part of commercial
dairy industry. Loose milk has a larger market in India as it is perceived to be fresh by
most consumers. In reality however, it poses a higher risk of adulteration and
contamination.
The production of milk products, i.e. milk products including infant milk food, malted
food, condensed milk & cheese stood at 3.07 lakh MT in 1999. Production of milk
powder including infant milk-food has risen to 2.25 lakh MT in 1999, whereas that of
malted food is at 65000 MT. Cheese and condensed milk production stands at 5000 and
11000 MT respectively in the same year..
Amul's secret of success
The system succeeded mainly because it provides an assured market at
remunerative prices for producers' milk besides acting as a channel to market the
production enhanFOODS package. What's more, it does not disturb the agro-system of
the farmers. It also enables the consumer an access to high quality milk and milk
products. Contrary to the traditional system, when the profit of the business was cornered
by the middlemen, the system ensured that the profit goes to the participants for their
socio-economic upliftment and common good.
Looking back on the path traversed by Amul, the following features make it a pattern and
model for emulation elsewhere. Amul has been able to:
49
Bring at the command of the rural milk producers the best of the technology and
harness its fruit for betterment
Provide a support system to the milk producers without disturbing their agroeconomic systems
Plough back the profits, by prudent use of men, material and machines, in the
rural sector for the common good and betterment of the member producers and
Even though, growing with time and on scale, it has remained with the smallest
producer members. In that sense, Alum is an example par excellence, of an
intervention for rural change.
The Union looks after policy formulation, processing and marketing of milk, provision of
technical inputs to enhance milk yield of animals, the artificial insemination service,
veterinary care, better feeds and the like - all through the village societies.
The village society also facilitates the implementation of various production
enhanFOODS and member education programs undertaken by the Union. The staff of the
village societies have been trained to undertake the veterinary first-aid and the artificial
insemination activities on their own.
Amul's success: A model for other districts to follow.
Amul's success led to the creation of similar structures of milk producers in other
districts of Gujarat. They drew on Amul's experience in project planning and execution.
Thus the 'Anand Pattern' was followed not just in Kaira district but in Mehsana,
Sabarkantha, Banaskantha, Baroda and Surat districts also. Even before the Dairy Board
of India was born, farmers and their leaders carried out empirical tests of the hypotheses
that explained Amurs success. In these districts, milk producers and their leaders
experienced significant commonalties and found easy and effortless ways to adapt Amul's
50
gameplan to their respective areas. This led to the Creation of the National Dairy
Development Board with the clear mandate of replicating the 'An and pattern' in other
parts of the country. Initially the pattern was followed for the dairy sector but at a later
stage oilseeds, fruit and vegetables, salt, and tree sectors also benefited from it's success.
51
COMPANY PROFILE
HERITAGE AT A GLANCE:
The Heritage Group, founded in 1992 by Sri Nara Chandra Babu Naidu, is
one of the fastest growing Private Sector Enterprises in India, with three-business
divisions viz., Dairy, Retail and Agri under its flagship Company Heritage Foods (India)
Limited (HFIL), one infrastructure subsidiary - Heritage Infra Developers Limited and
other associate Companies viz., Heritage Finlease Limited, Heritage International
Limited and Heritage Agro Merine Private Limited. The annual turnover of Heritage
Foods crossed Rs.347 crores in 2011-07 and is aiming for Rs.700 crores during 2012-08.
Presently Heritages milk products have market presence in Andhra
Pradesh, Karnataka, Kerala, Tamil Nadu and Maharashtra and its retail stores across
Bangalore, Chennai and Hyderabad. Integrated agri operations are in Chittoor and Medak
Districts and these are backbone to retail operations.
In the year 1994, HFIL went to Public Issue to raise resources, which was
oversubscribed 54 times and its shares are listed under B1 Category on BSE (Stock Code:
519552) and NSE (Stock Code: HERITGFOOD)
About the founder:
Sri Chandra Babu Naidu is one of the greatest Dynamic, Pragmatic,
Progressive and Visionary Leaders of the 21 st Century. With an objective of bringing
prosperity in to the rural families through co-operative efforts, he along with his relatives,
friends and associates promoted Heritage Foods in the year 1992 taking opportunity from
the Industrial Policy, 1991 of the Government of India and he has been successful in his
Endeavour.
At present, Heritage has market presence in all the states of South India.
More than three thousand villages and five lakh farmers are being benefited in these
states. On the other side, Heritage is serving more than 6 lakh customers needs,
52
employing more than 700 employees and generating indirectly employment opportunity
to more than 5000 people. Beginning with a humble annual turnover of just Rs.4.38
crores in 1993-94, the sales turnover has reached close to Rs.300 crores during the
financial year 2010-2011.
Sri Naidu held various coveted and honorable positions including Chief Minister
of Andhra Pradesh, Minister for Finance & Revenue, Minister for Archives &
Cinematography, Member of the A.P. Legislative Assembly, Director of A.P. Small
Industries Development Corporation, and Chairman of Karshaka Parishad.
Sri Naidu has won numerous awards including " Member of the World
Economic Forum's Dream Cabinet" (Time Asia ), "South Asian of the Year " (Time
Asia ), " Business Person of the Year " (Economic Times), and " IT Indian of the
Millennium " ( India Today).
Sri Naidu was chosen as one of 50 leaders at the forefront of change in the
year 2000 by the Business Week magazine for being an unflinching proponent of
technology and for his drive to transform the State of Andhra Pradesh.
Forward looking statements:
We have grown, and intended to grow, focusing on harnessing our
willingness to experiment and innovate our ability to transform our drive towards
excellence in quality, our people first attitude and our strategic direction.
Mission:
Bringing prosperity into rural families of India through co-operative efforts
and providing customers with hygienic, affordable and convenient supply of Fresh and
Healthy " food products.
53
Vision:
To be a progressive billion dollar organization with a pan India foot print by 2012.To
achieve this by delighting customers with "Fresh and Healthy" food products, those are a
benchmark for quality in the industry.
We are committed to enhanced prosperity and the empowerment of the
farming community through our unique "Relationship Farming" Model.
To be a preferred employer by nurturing entrepreneurship, managing
career aspirations and providing innovative avenues for enhanced employee prosperity.
Heritage Slogan:
When you are healthy, we are healthy
When you are happy, we are happy
We live for your "HEALTH & HAPPINESS"
Quality policy of HFIL:
We are committed to achieve customer satisfaction through hygienically
processed and packed Milk and Milk Products. We strive to continually improve the
quality of our products and services through up gradation of technologies and systems.
Heritage's soul has always been imbibed with an unwritten perpetual commitment
to itself, to always produce and provide quality products with continuous efforts to
improve the process and environment.
Adhering to its moral commitment and its continuous drive to achieve
excellence in quality of Milk, Milk products & Systems, Heritage has always been laying
emphasis on not only reviewing & re-defining quality standards, but also in
implementing them successfully. All activities of Processing, Quality control, Purchase,
54
Stores, Marketing and Training have been documented with detailed quality plans in each
of the departments.
Today Heritage feels that the ISO certificate is not only an epitome of
achieved targets, but also a scale to identify & reckon, what is yet to be achieved on a
continuous basis. Though, it is a beginning, Heritage has initiated the process of
standardizing and adopting similar quality systems at most of its other plants.
Commitments:
Milk Producers:
Change in life styles of rural families in terms of:
Heritage
55
Customers:
Employees:
Heritage forges ahead with a motto "add value to everything you do"
Shareholders:
Returns:
Consistent Dividend Payment since Public Issue (January 1995)
Service:
56
Suppliers:
Doehlar: technical collaboration in Milk drinks, yogurts drinks and fruit flavored
drinks Alfa-Laval: supplier of high-end machinery and technical support Focusing on
Tetra pack association for products package.
Society:
Customer focuses to understand and meet the changing needs and expectations
of customers.
2.
People involvement to promote team work and tap the potential of people.
3.
Leadership to set constancy of purpose and promote quality culture trough out
the organization.
4.
5.
6.
7.
8.
Development of suppliers to get right product and services in right time at right
place.
58
BRANCHES OF HFIL:
HFIL has 3 wings. They are
1.
Dairy
2.
Retail
3.
Agribusiness
1. Dairy:
It is the major wing among all. The dairy products manufactured by HFIL are
Milk, curd, butter, ghee, flavoured milk, paneer, doodhpeda, ice cream.
2. Retail:
In the retail sector HFIL has outlets namely Fresh@. In those stores the
products sold are vegetables, milk& milk products, grocery, pulses, fruits etc.
In Hyderabad 19 retail shops are there. In Bangalore& Chennai, 3&4
respectively are there. Totally there are 26 retail shops are there.
Fresh@ is a unique chain of retail stores, designed to meet the needs of the
modern Indian consumer. The store rediscovers the taste of nature every day making
grocery shopping a never before experience.
The unique&
range of fresh fruits and vegetables which are directly hand picked from the farms.
Freshness lies in their merchandise and the customers are always welcomed with fresh
fruits and vegetables no matter what what time they walk in.
3. Agri Business:
59
In this business HFIL employees will go to farmers and have a deal with
them. Those farmers will sell their goods like vegetables, pulses to HFIL only. And HFIL
will transport the goods to retail outlets.
The agricultural professors will examine which area is suitable to import
vegetables from and also examine the vegetables, pulses and fruits in the lab. And finally
they report to the Head-Agribusiness. Representatives as per the instructions given by the
agri professors will approach the farmers directly and make a deal with them. It is the
process of registering the farmers
60
CHAPTER-IV
DATA ANALAYSIS AND
INTERPRETATION
61
DESCRIPTION
1.
2.
Other Income
3.
Increase in Inventory
BUDGETED
Total
ACTUALS
VARIANCE
60,66,25,179
55,14,77,436
5,51,47,743
35,96,102
32,69,184
3,26,918
(-) 1,59,33,057
(-) 1,44,84,597
(-) 14,48,460
59,42,88,224
54,02,62,023
5,40,26,201
In this year it can be seen that every item actuals are bellow the budget estimate
which reprehensions a positives indications of savings, the actuals are beyond budget
estimates due to revision in pay scales. Which can be ignored, because in total budget
estimates are more then the actuals
In revenue receipts, the actuals are below the budgeted. Except in increase in
inventory value is negative. The budget estimates with a good variation percentage.
62
DESCRIPTION
1.
Materials Consumed
2.
Consumable stores
3.
Employee
BUDGETED ACTUALS
25,16,39,707 22,87,63,370
VARIANCE
2,28,76,337
2,05,89,260
1,87,17,509
18,71,751
32,40,003
29,45,458
2,94,545
8,78,97,229
7,99,06,572
79,90,657
2,74,36,923
2,49,42,658
24,94,265
Depreciation
1,78,56,564
1,62,33,240
16,23,324
Total
40,86,59,686
37,15,08,807
3,71,50,879
Remuneration &
Benefits
4.
Administrative
&Operation
Expenses
5.
Manufacturing
Expenses
6.
63
DESCRIPTION
1.
2.
Other Income
3.
Increase in Inventory
Total
BUDGETED
ACTUALS
VARIANCE
40,68,80,342
36,98,91,220
3,69,89,122
28,00,738
25,46,126
2,54,612
(-) 7,807
(-) 7,098
(-) 709
40,96,73,273
37,24,30,248
3,72,43,025
In this year, the budgeted are above the actuals. Material consumed is high value
the budget estimates among all items and in total that shows a good budgeting effort
makes the actuals.
In revenue receipts, the budgeted are above the actuals, but with a minimum
percentage of variation as compared with previous year.
64
S.
No
.
DESCRIPTION
1.
Materials Consumed
2.
Consumable stores
3.
Employee
BUDGETE
D
ACTUALS
56,21,68,072 51,10,61,883
VARIANCE
5,11,06,189
4,77,76,051
4,34,32,773
43,43,278
58,97,375
53,61,250
5,36,125
5,60,64,572
5,09,67,793
50,96,779
9,98,08,181
9,07,34,710
90,73,471
Depreciation
2,39,11,697
2,17,37,907
21,73,790
Total
79,56,25,948
72,32,96,316
7,23,29,632
Remuneration &
Benefits
4.
Administrative
&Operation
Expenses
5.
Manufacturing
Expenses
6.
65
DESCRIPTION
1.
2.
Other Income
3.
Increase in Inventory
Total
BUDGETED
ACTUALS
VARIANCE
79,43,88,636
72,21,71,487
7,22,17,149
28,95,385
26,32,169
2,63,216
(-) 2,73,515
(-) 2,48,650
(-) 24,865
79,70,10,506
72,45,55,006
7,24,55,500
During this year budget estimates are above actuals are below. The budgets and
actuals increasing in compared to previous year.
In revenue receipts budget estimates are above the actuals which indicates a good
variation.
66
S.
No.
DESCRIPTION
BUDGETED ACTUALS
1.
Materials Consumed
2.
Consumable stores
2,34,74,752
2,13,40,684
21,34,060
3.
Employee
1,00,08,138
90,98,308
9,09,830
2,64,40,645
2,40,36,950
24,03,695
8,40,70,526
7,64,27,751
76,42,775
Depreciation
2,27,69,641
2,06,99,674
20,69,967
Total
49,44,33,132
44,94,84,667
4,49,48,465
32,76,69,430 29,78,81,300
VARIANCE
2,97,88,130
Remuneration &
Benefits
4.
Administrative
&Operation
Expenses
5.
Manufacturing
Expenses
6.
67
DESCRIPTION
1.
2.
Other Income
3.
Increase in Inventory
BUDGETED
ACTUALS
VARIANCE
49,73,20,694
45,21,09,721
4,52,10,973
31,48,358
28,62,144
2,86,214
(-) 36,71,613
(-) 33,37,830
(-) 3,33,783
68
Total
49,67,97,439
4,51,63,404
45,16,34,035
This year budgets and actuals estimates are below compared to the 2005-2006
except in employee remuneration and benefits.
In revenue receipts, the budgeted are above the actuals. Increase in inventors
value in negative the budget estimates with a good percentage of variation.
DESCRIPTION
BUDGETED ACTUALS
69
VARIANCE
1.
Materials Consumed
2.
Consumable stores
3.
Employee
54,62,62,961 49,66,02,692
4,96,60,269
95,94,838
1,25,35,153
87,22,580
8,72,258
1,13,95,594
11,39,559
8,48,91,273
7,71,73,885
78,17,388
13,48,25,637 12,25,68,761
.
1,22,56,876
Remuneration &
Benefits
4.
Administrative
&Operation
Expenses
5.
Manufacturing
Expenses
6.
Depreciation
2,28,97,612
2,08,16,011
20,81,601
Total
81,11,087,474
73,72,79,523
7,38,27,951
MATERIAL CONSUMED
YEAR
2009-2010
2010-2011
BUDGETED
41,06,22,773
25,16,39,707
70
ACTUALS
37,32,93,430
22,87,63,370
2011-2012
2012-2013
2013-2014
56,21,68,072
32,76,69,430
54,62,62,961
51,10,61,883
29,78,81,300
49,66,02,692
MATERIAL CONSUMED
600000000
500000000
400000000
300000000
BUDGETED
ACTUALS
2006-2007
200000000
100000000
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
YEARS
Interpretation :
By observing the above graph the materiel consumption is fluctuating from 2009-2014.
So the company needs effective budget technique to get targeted actual.
CONSUMABLE STORES
YEAR
2009-2010
2010-2011
2011-2012
BUDGETED
3,72,07,068
2,05,89,206
4,77,76,051
71
ACTUALS
3,38,24,607
1,87,17,509
4,34,32,773
2012-2013
2013-2014
2,34,74,752
95,94,838
2,13,40,684
87,22,580
CONSUMABLE STORES
60000000
50000000
40000000
30000000
BUDGETED
ACTUALS
2006-2007
20000000
10000000
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
YEARS
Interpretation :
By observing the above graph the consumable stores is fluctuating from 2009-2014. The
value is decreased from 3, 38, 24,607 in 2008 to 09, and 22,580 in 2014 so the company
needs effective budget techniques to get targeted actual.
BUDGETED
10,22,353
32,40,003
58,97,375
1,00,08,138
1,25,35,153
72
ACTUALS
9,29,412
29,45,458
53,61,250
90,98,308
1,13,95,594
BUDGETED
ACTUALS
2006-2007
4000000
2000000
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
YEARS
Interpretation :
By observing the above graph the employee remuneration and benefits are fluctuating
from 2009 to 2014. There is an increase in the values from 9, 29,412 in 2010 to 1, 13, and
95,594 in 2014 So the company should follow the same technique and also improve to
get targeted actual.
BUDGETED
10,01,60,814
8,78,97,229
5,60,64,572
2,64,40,645
8,48,91,273
ACTUALS
9,10,55,285
7,99,06,572
5,09,67,793
2,40,36,950
7,71,73,885
73
120000000
100000000
80000000
60000000
BUDGETED
ACTUALS
2006-2007
40000000
20000000
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
YEARS
Interpretation :
By observing the above graph the administrative and operation expenses are fluctuating
from 2009 to 2014. there is an decrease in the values from 9,10,55,285 in 2009 to
7,71,73,885 in 2014t o the company need effective budget techniques to get targeted
actual.
MANUFATURING EXPENSES
YEAR
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
BUDGETED
2,95,12,360
2,74,36,923
9,98,08,181
8,40,70,526
13,48,25,637
MANUFATURING EXPENSES
74
ACTUALS
2,68,29,419
2,49,42,658
9,07,34,710
7,64,27,751
12,25,68,761
160000000
140000000
120000000
100000000
80000000
BUDGETED
60000000
ACTUALS
2006-2007
40000000
20000000
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
YEARS
Interpretation :
By observing the above graph the manufacturing expenses are fluctuating from 20092014 there is a increase in the values from 2,68,29,419 in 2006 to 12,25,68,761 in 2013.
so the company should follow the same technique and also improve to get targeted actual.
DEPRECIATION
YEAR
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
BUDGETED
1,47,38,772
1,78,56,564
2,39,11,697
2,27,69,641
2,28,97,612
DEPRECIATION
75
ACTUALS
1,33,98,884
1,62,33,240
2,17,37,907
2,06,99,674
2,08,16,011
30000000
25000000
20000000
15000000
BUDGETED
ACTUALS
2006-2007
10000000
5000000
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
YEARS
Interpretation :
By observing the above graph the depreciation values are fluctuating from 2009-2014.
There is an increase in the values from 1,33,98,884 in 2009 to 16,011 2013 so the
company need effective budget techniques to get targeted actual.
BUDGETED
60,66,25,179
40,68,80,342
79,43,88,636
49,73,20,694
79,52,53,505
ACTUALS
55,14,77,436
36,98,91,220
72,21,71,487
45,21,09,721
72,29,57,732
76
900000000
800000000
700000000
600000000
500000000
400000000
BUDGETED
ACTUALS
2006-2007
300000000
200000000
100000000
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
YEARS
Interpretation :
By observing the above graph the sales and other receipts are fluctuating from 20092014.there is an increase in the values from 55,14,77,436 in 2006 to 72,29,57,732 in
2011. There is an increase in the actual so the company need effective budget techniques
to increase the sale of targeted actual.
OTHER INCOME
YEAR
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
BUDGETED
35,96,102
28,00,738
28,95,385
31,48,358
32,10,311
OTHER INCOME
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ACTUALS
32,69,184
25,46,126
26,32,169
28,62,144
29,18,465
4000000
3500000
3000000
2500000
2000000
BUDGETED
1500000
ACTUALS
2006-2007
1000000
500000
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
YEARS
Interpretation :
By observing the above graph the other incomes are also fluctuating from 2009-2014
there is a decrease in the value 32,69,184 in 2009 to 29,18,465 in 2011 so the company
need effective budget techniques to get targeted actual.
INCREASE IN INVENTORY
YEAR
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
BUDGETED
(-)1,59,33,057
(-)7,807
(-)2,73,515
(-)36,71,613
(-)1,53,54,455
INCREASE IN INVENTORY
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ACTUALS
(-)1,44,84,597
(-)7,098
(-)2,48,650
(-)33,37,830
(-)1,39,58,596
0
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
-2000000
-4000000
-6000000
-8000000
-10000000
BUDGETED
ACTUALS
2006-2007
-12000000
-14000000
-16000000
-18000000
YEARS
Interpretation :
By observing the above graph the increase in inventory values. The values are in
negative. The company should concentrate on this to improve the increasing in the
inventory.
CHAPTER-V
FINDINGS,SUGGESTION AND
CONCLUSION
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FINDINGS
1. The budget and budgetary control of HERITAGE FOODS.. Was found to be
very effective when considered all categories of items.
2. In spite of having techniques many techniques of budget system, the company is
not following any of the system to control budgete.
3. .In the 2009-2014 the total budgets value was high. Where was in the next two
years it has come down drastically.
4. In all the five years budget expenditure was of high consumption a value.
5.
6. It is also found that the reasons for maintaining huge stock of manufacturing
expenses in 2010-2011 is due to high production of manufacturing expenses as
well as the sales is also high in the year of 2011-2012 compared to other year.
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6. The revenue expenditure will be spent based on the production target irrespective
of the revenue receipts.
7. In this proves the effective financial performance of budget department in the
organization
CONCLUSIONS
Since, all the production units in HERITAGE FOODS.. Will run perpetually
through out the year, there will be minimum variations in the revenue expenditure budget
estimates and actual. As the expenditure will be incurred more or less to the estimations
made by the organization.
In concern with overhead expenses, it will also be with minimum variations
between budget estimates and actual. Since the production process will be consistent.
Any change in the items of expenditure, will lead to the review in the budget estimates by
the accounts and finance department. It is also suggested to the company that budget
techniques will be very useful to control and manage cost effectively.
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BIBLIOGRAPHY
Books referred:
Financial Management: M.Y. Khan & P. K. Jain, Fourth edition, published by
TATA McGraw HILL.
Financial Management: Prof. Satish Inamdar, published by Symbiosis center
for distance learning, Pune.
Financial Management; I. M. Pandey, Second edition, published by TATA
McGraw HILL publishing company.
Financial Management : Prasannachandra
Management Accounting and control S.N.Maheswari
83
Internet sites:
www.HERITAGEFOODS.com
www.yahoofinance.com
www.google.com
Springer (Jan-10)
Financial Budget.
Times of India.
Financial cornices .
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